sharpe inc. currently has $60 million in debt and 30$ million shares outstanding. existing debt pays 5%. the company is planning an expansion that is expected to cost $100 million. the expansion can be financed with 1) new equity or 2) bonds with an interest rate of 6%. the firm's marginal tax rate is 40%.

a)compute the indifference point between the two alternatives

b)if the expected level of EBIT for the firm is 50 million with a standard deviation of 50 million what is the probability that the debt alternative will produce higher earnings that the equity alternative

c) if the debt alternative is chosen, what is the probability that the firm will have negative earnings per share in any operiod?